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Thursday, May 26, 2011

Sears strategy

Sears strategy is concerned with developing long term relationship with customers by best product with value added services either by reducing cost or by improving customer service. They want to build brands identity being technologically innovative. They are trying to develop “The SHC Way” with fast, focused and effective services.

Sears want to build a winning culture, by creating a passion for performance and by changing with the needs of the customers which includes credit facilities, customer service, home delivery, mail order, internet sales, etc. To remain innovative and continually find new ways to create value Sears continues to explore acquisitions, joint ventures, strategic alliances, and electronic commerce. It possesses data mining which allows Sears to target "micro-markets," thus giving it the ability to tailor the product mix by store. It seeks out the market leader in each segment to find its best practices, then experiments to see if these practices can be instituted with similar results at Sears. In addition to this, Sears is trying to achieve consistent productivity gains focusing on constant incremental improvements within the business unit and logistics chain.

There are several external environmental factors (macro environmental factors) that will impact Sears’s business and its strategies. In the macro environment there are economic, political, socio-cultural and technological factors that will impact Sears.

Economic factor that affect Sears Business possibilities and its strategies are:

Income: In the United States consumers purchasing power is going down due the decreased in income level of the peoples. This affects all the business including Sears. Therefore, Sears should come up with a distinctive strategy to tackle with this critical environmental threat. The possible strategy to address this problem could be low price by reducing the cost associated with inventory and supply chain.

Inflation: Continuous increased in general price level is another economical threat to the retailers like Sears. Sears strategy is largely affected by the inflation which not only reduces the purchasing power of money but also it will lose price competitiveness in the international market.

Economic Recession: Another economic environmental factor affecting the Sears business strategy is economic recession. Recession leads business to lower growth and which in turn leads to lower profits, therefore dividends declines and shares become less attractive which ultimately leads tothe decline in profitability.

Unemployment:This is one of the major problems in world economy today. Even United States economy is facing incremental unemployment which reduces the income level of the people and which in turn reduce the disposable income therefore, people are reluctant to spend and they try to save more leading to the poor mobilization of the resources in the economy. This obviously affects the Sears strategy because they may try to stock less to reduce the cost associated with the inventory.

Technological factors affecting Sears Business

Technological factors influence the competitive position of the business. Advancements in technology can impact the transformation plan of any business like Sears in many ways. To avoid obsolescence and promote innovation within the organization, any business should understand and able to incorporate technological change that might influence firms profitability and success both in short run and in long run.For example, in recent years, internet is becoming a way of people’s life. E-commerce is a popular means of buying and selling goods and services. Because of the growing internet and e-commerce popularity, Sears is trying to capitalize on the internet. Therefore, Internet, e-commerce and other technological change obviously affect the strategic choice of the Sears.

Political environmental factors affecting the Sears business:

Political environmental factors are more associated with the overall political situation and political scenario of a concerned country in which business is located. In my opinion, Sears’s business decisions and strategy is not very much affected by the US political atmosphere because of political and government stability in the country. But it doesn’t mean it is completely far from political change. Every business either one way or the other is affected by the political change and political decision in the country. For example, if new government changes business legislation then the business has to adopt and incorporate such change.

Social values and lifestyle:

Social values and life style is also one of the core components of macro business environment. Peoples values, beliefs and lifestyle changes overtime so business organization has to cope with those changes accordingly addressing those changes in their corporate strategy to be successful and sustainable. Every business should understand global social and environmental trends and their implications for their business strategy and they should integrate such change into corporate as well as business strategy. For example Sears should concern with educating its employees aboutother societies and cultures because its market is becoming a culturally diversified and as the entire world is becoming single village in terms of doing business. Not only this but also they should be aware of international culture with ethical and religious considerations. Even the US domestic market is rich with diversified culture and religion. And it is also true that people’s value and lifestyles in the United States is changing so quickly because of presence of different cross culture in the society. All these issues affect the way business operates in the particular society. Therefore, a retailer like Sears should incorporate such social changes in their strategic choice to attract all those culturally diversified people and consumer group. In my opinion, societal values and lifestyle is the key components of Sears’s macro environment.

Population and Demographics:

Population or consumer statistics regarding socioeconomic factors such as age, income, sex, occupation, education, family size, etc. also affect the business. For example, if Sears want to market certain product then it should first define who their target customer is by defining the age of the target customers, religion, and geographic location etc. of the customer group in order to come up with the broad marketing strategic plan. Therefore, demographic and population of the concerned target market is also the key decision making indicator for developing winning strategy of an organization.

Competitive Environmental factors affecting the Sears Business:

Every business has external peers generally called as competitors who provide similar functions and sells similar type of goods and services to its customers. These peers are considered as competitors and they are rival producers of goods or services. These competitors contribute to the overall industry by their ability to deliver goods and services of high caliber at competitive prices. Sears competitors are primarily in the Department Stores industry. Sears also competes in the Apparel & Accessories Retail, Auto Parts Retail, and Consumer Electronics & Appliances Retail sectors. Major Sears’s competitors are J. C. Penney, Target, and Wal-Mart. These competitive environments largely affect the Sears business and its strategies. For example if competitors changed its product price then Sears’s business will affected by it and it should change its strategy in order to be competitive in the market. Every decision of the competitors inthe market place affect Sears business either one way or the other.